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Employers now have flexibility of adding extensions
to Great-West Healthcare FSAs
Up to two-and-a-half month extensions give members extra time each year to spend their tax-sheltered accounts on medical and dependent care expenses
GREENWOOD VILLAGE, Colo., Nov. 29, 2005 — Great-West Healthcare, a national employee benefits provider, announced it will offer employers the option each year of adding a grace period to flexible spending account (FSA) plans. This option comes on the heels of the Internal Revenue Service (IRS) notice in May allowing employers to offer extensions that would give employees additional time to incur expenses that draw down funds in their prior-year FSA. For example, a worker on a calendar year plan could have until March 15, 2006 to incur claims that draw down monies set aside in their FSA during 2005.
Employers can choose a grace period from one month, one month and 15 days, two months or two months and 15 days for Great-West Healthcare health and dependent care FSAs. Extensions may be added to FSAs beginning with the 2005 plan year, so calendar-year FSA plans have until Dec. 31, 2005 to amend their plans.
Great-West Healthcare also will give employers the option to extend the “run-out period” – the period during which employees may submit qualified expenses for reimbursement – to 120 days after the end of the plan year (90 days is standard).
“Under the new IRS guidelines, members now have more flexibility and some relief from the FSA ‘use it or lose it’ rule,” said Cindy Donohoe, vice president of marketing and product development at Great-West Healthcare. “If employers choose to offer the extension, the risk of forfeiting FSA money is reduced, which could help increase FSA participation.”
Great-West Healthcare FSA products
Great-West Healthcare FSA products allow employees to use pre-tax money for eligible medical and dependent care expenses. By having money deducted from their paycheck on a pre-tax basis, workers pay less tax on income and reimburse themselves for covered services using the set-aside funds. The FSA allows employers and employees to enjoy tax savings while helping employees pay for qualified out-of-pocket expenses.
About Great-West Healthcare
Great-West Healthcare, a division of Great-West Life & Annuity Insurance Company, is a national employee benefits provider with expertise in self-funding and health care management solutions. Nationally, the division operates a health care network that includes more than 4,200 hospitals and 530,000 providers and provides health care coverage to nearly 2 million people. Visit www.greatwesthealthcare.com for more information.
Great-West Life & Annuity Insurance Company, headquartered in metro-Denver, serves its customers through a full range of health care plans, life and disability insurance, annuities, and retirement savings products and services. It is an indirect, wholly owned subsidiary of Great-West Lifeco Inc. and a member of the Power Financial Corporation group of companies. Great-West Life & Annuity Insurance Company is not licensed to do business in New York. Products are sold in New York by its subsidiary First Great-West Life & Annuity Insurance Company, White Plains, N.Y.
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